The science of psychology studies people at three levels of focus captured by the well known quote: “Every man is in certain respects (a) like all other men, (b) like some other men, (c) like no other man" (Murray, H.A. & C. Kluckhohn, 1953).

Individual differences psychology focuses on this second level of study. It is also sometimes called Differential Psychology because researchers in this area study the ways in which individual people differ in their behavior. This is distinguished from other aspects of psychology in that although psychology is ostensibly a study of individuals, modern psychologists often study groups or biological underpinnings of cognition. For example, in evaluating the effectiveness of a new therapy, the mean performance of the therapy in one group might be compared to the mean effectiveness of a placebo (or a well-known therapy) in a second, control group. In this context, differences between individuals in their reaction to the experimental and control manipulations are actually treated as errors rather than as interesting phenomena to study. This is because psychological research depends upon statistical controls that are only defined upon groups of people. Individual difference psychologists usually express their interest in individuals while studying groups by seeking dimensions shared by all individuals but upon which individuals differ.

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The study of individual differences is essential because important variation between individuals can be masked by averaging. For example, a researcher is interested in resting metabolic rate in humans. The researcher gathers a sample of men, women, and children, measures their metabolic rate and gets a single average. The researcher then tells the whole population that they should be eating 1,900 calories a day. What's wrong with this study? The researcher has neglected individual differences in activity level, body size, sex, age, and other factors that influence metabolic rate. The average reported based on the results is masking multiple dimensions that should be used to determine daily caloric intake. Therefore, his or her conclusions are misleading if not outright false. This is an extreme example to make a point, but it illustrates the problems that can arise by averaging across groups.

The London School of Differential Psychology is a particular subset of researchers interested in explaining individual differences. Researchers in this area often (though not necessarily) look toward biology as an explanation. Its members have contributed much by way of their research in psychometrics, behavior genetics, and General intelligence factor.